Lessons from Japan's deflationary spiral

Both Greece and Italy have a lower debt to gross domestic product ratio than Japan. Yet, Japan pays very low long-term nominal bond yields. Why can Japan afford a debt of 200% (versus GDP), while markets require much higher bond yields from eurozone peripheral countries? The eurozone can learn from Japanese policy making. Since approximately 1995, the US economy and the eurozone economy have seen around 70%-80% increases in nominal GDP (inflation included). The Japanese economy is an outliner as it is still some 10% below the peak of early 1997. The main culprit is a declining trend in p...